OPEC/Saudi 'Promises' Fail To Ignite Momentum in WTI Crude Prices

WTI crude remains stuck ominously below $46 despite a full court press jawboning, headline-pumping effort this morning. As oil leaders meet in St.Petersburg, Saudis promised to cut exports further, Nigeria suggested it would limit output (at dramatically higher-than-current production), Russia offered hope that Q3 had "big potential", and OPEC suiggested tighter compliance monitoring (as cheating has picked up in recent months).. but oil just won't budge.

As Bloomberg reports, OPEC and partners meet in St. Petersburg where the Saudi energy minister says he expects deep cut in nation’s August exports.

OPEC/non-OPEC meeting:

  • Saudi Arabia’s Al-Falih says inventory draw-down to accelerate, demand picking up; Saudis to cap exports at 6.6m b/d in August, y/y decline of 1m b/d
  • Joint ministerial committee said to discuss monitoring oil exports along with production figures; Al-Falih says exports have become key metric for financial markets
  • OPEC may need to discuss in November extending cuts: U.A.E.
  • Nigeria to limit output to 1.8m b/d if it can reach that level: Oman
  • Russia’s Novak sees ‘‘big potential’’ for oil markets in 3Q; not opposedto monitoring exports

And this is the result... a quick spike above $46... then fall back.

It is clear that OPEC/NOPEC has lost the market's self-referential confirmation circle ('we buy when you speak'). Simply put, US shale's short-term response cycle to any increase in oil prices means any actions taken by the Saudis to juice the energy market are quickly stifled by resurgent US production.